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I don’t mean to be evasive, but it’s not that symple! The effect may be a binary choice, but the cause(s) that led to the decision, weren’t necessarily so. It depends on what the predicates for making the trade were based upon. Those could change from day to day or even intraday. I can’t narrow it down to one indicator or another.
I mentioned trading is highly nuanced. Part of that nuance, is that a great deal of my decisions are based on implicit learning. That is, 'the non-intentional acquisition of knowledge about structural relations between objects or events’. At any given point in time, Im following information flows that I believe are coincidental with or better yet, leading price. If I’m doing it correctly, the feedback Im receiving gives me the insight that helps enable the intuitive process.
You mentioned in an other thread: "Any approaches tailored to past markets, should be discarded with yesterday's trash.". As I do not know what kind of trader you are would you may tell what kind of trader you are?
Why do I ask this question?
I think it is easy to say that what you told. But doe's it not matter what kind of trader some one is. Doe's it not matter if some one is a pure future trader or may an option trader or may even a professional hedger? Why should an old pro in options of a sudden throw away all what he has on experience from the past under any circumstances? The same counts for a pro Hedger.
As I never was a pure pro future trader, this questions raised when reading your comment in the other thread. So this are just questions. Nothing more and nothing less.
He already did, most recently in a series of posts in the "spoos" thread discussing recent trades, beginning here, as well as in many posts in that thread over the years:
The importance of holding on to your winners and adding, and how it can lead to asymmetric payoffs!
+5 figure trade with 1 lots; and money was left on the table. It can be done if you squeeze your winners, and add judiciously. Initiated the trade …
The spoos thread is one of the gems of nexusfi.com, containing well over 37,500 posts over a period of about 11 years, and many of the major traders in the forum have been participants over that span, and still are.
But it is in the Elite section -- deliberately. Not everything in the forum is going to be freely available. New members, and sometime older ones, sometimes ask why they should bother to pay the one-time fee, and our answer is always, if you don't think it may be worth it to find out what is not openly shared, after having some experience with what is, then don't do it. It's an individual choice, after all.
But there is much that is missed with that choice. Some conclude that they know what is on the other side of the door without needing to see, and decide not to look. No problem.
As with any invitation that is sincerely meant, it's perfectly OK if someone does decide to decline. But there may be something there.
Obviously, I have no idea if any of it would be of any interest or value to you or any particular trader, which is why it is a choice. But some of the best stuff in the forum is found there, not in the freely available area.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
love this.
do you mean its not as simple as risk off = sell - its risk off in a growth cycle with high vol skew and then seeing what risk reversals are doing at futures SD? lol something like that? in any event, Im guessing the analyzing of data takes much experience and knowledge. Excellent stuff.
I would just love to know what returns you get per day? what % risk is standard. 1-3%?
Dont have to answer that of course. Its all very interesting though.
For years I have been trying to trade the futures with charts only, mostly the /es. I am still not profitable. What your saying describes my trading exactly. You mention that you are watching information flows to make your decision are you referring to something you see on the charts or an out side source? I keep asking my self why it is so easy to lose and so hard to win. When I do make a good trade is seems that it is based on luck rather than skill. Even after perhaps hundreds of hours watching the charts, I still find it impossible to predict rather it is a reversal or just a pull back. I seldom post anything or join conversation but your topic hit home . I would like to find away to make trading work for me, after so many years trying I still do not want to give up.
Same here, and that's after perhaps thousands of hours of watching them. I'm reconciled to that. I don't need to be able to "predict" whether a change in price direction is a reversal or just a pull back.
I know that out of the next few hundred changes in price direction I see, on my chart set-up, roughly x% will be reversals and roughly y% will be just pull backs. Overall. And "overall" is what matters.
It doesn't matter to me whether the next trade-entry is based on something that turned out to be just a pull back or something that turned out to be a reversal. What matters is what happens over the next few hundred, or however many.
I have no way of knowing whether any trade I enter will be a winner or a loser, but I can live with that, as long as I know reasonably reliably what proportion out of the next few hundred will be winners/losers. It's the same with reversals and pull backs. What the next one is doesn't matter. The collective, "bigger picture" matters. Sample-sizes of 1 don't signify anything, and "predictability" is a probability function, not something that applies to an individual entry, trade or change in price-direction.
I don't think you understand how trading with a probabilistic edge works. "quickly removed from the market by people trading the signal" is logically retarded. The more people trading the signal the BETTER the edge will work in your favor. You are confusing probabilistic edge with what i would call a "true" edge...example being options mispricing that could be found in the 80's, arbitrage opportunities, etc...
as to the thread title...my best trades had nothing to do with charts and everything to do with paying attention to what was going on around me...getting in right before the move and instantly going green and staying that way. Those trades are only available a handful of times a year at best IMO though.
Thanks for the reply. Do you think the trading platform you are using has anything to do with the results you are getting? I have used TOS from the beginning.
i know you werent asking me but i'll throw my opinion out there just because...I know a legit millionaire who uses TOS trading short synthetic straddles (ES)...hes been doing this a long time, using several platforms and recommends TOS.
I think these days most common platforms will provide more than enough to be successful...the individual is the problem.
The impact of large metaorders tends to follow a square root law. At first the impact appears to scale linearly with the number of orders, but as the order gets larger the impact does not increase as much. This can be expressed with the equation:
P = Y * σ * sqrt( Q / V)
Where σ is the volatility, V is the overall volume traded on the day, Q is the size of the metaorder, and Y is a scaling factor between 0 and 1 that is unique for each instrument.
This leads to the unintuitive result that 1% of the volume can be responsible for 10% of the volatility
P = Y * σ * sqrt( .01V / V)
P = Y * σ * .1
In other words it is not strictly true that the more people trading on a signal the better as there is a point at which the additional volume provides diminishing returns. To make money you want to be in early enough when the impact is still linear.
But there's another nasty consequence of this. A large metaorder being executed the other direction still at the beginning of its impact curve will have more impact on price. In other words it makes you vulnerable to a large move in the opposite direction.
We can think of a group of retail traders acting on the same technical signal as a single metaorder. The net effect of all traders buying into the signal and then exiting will on average end up with price being lower than it actually started. Their initial orders leave a wake behind them that makes price move more easily on the other side. Only the traders that are able to get in at the very beginning will be able to make profits.
The end result is a market that is very statistically significant, but also one where it's not practical to make money on your impact alone. Consistent profits can only come if you are able to predict the volume before it comes, and any purely technical signal that can do that will offer limitded profits if not disappear entirely. That's why after decades of trying nobody has ever been able to prove publicly that such technical analysis methods actually work using empirical data. Anybody that finds one is going to keep it to themselves because if they don't the signal will stop working.
Surely it can be done, and large institutions like Renaissance Capital are able to find them by investing millions in infrastructure. For the rest of us you'll have an easier time trading on informational inefficiencies.
